Bell Curve The Law Talking Guy Raised by Republicans U.S. West
Well, he's kind of had it in for me ever since I accidentally ran over his dog. Actually, replace "accidentally" with "repeatedly," and replace "dog" with "son."

Tuesday, June 28, 2011

How Did Greece Get Here

Greece is again (still) embroiled in crisis, riots and talk of default. How did it come to this? Greece is a long time in brewing this stew and the EU has let them do it.

Step 1: Greece had a ridiculously generous welfare state for a relatively poor country. For example, Greeks were allowed to retire with generous benefits as early as 55 years old. That’s great for middle aged Greeks. But where is the money going to come from? The country was poor in comparison to the rest of Europe. The Greek per capita GDP is well below the EU average. Greece also has a particularly under staffed and poorly organized tax authority. Even when taxes are – on paper – sufficient to pay for government expenditures, the Greek government has extreme difficulty collecting those taxes. So the answer to the money question was BORROW IT!

Step 2: The Greek government was initially prevented from adopting the Euro currency because their debt and deficit rates did not conform to the convergence criteria for adopting the Euro. Unfortunately, a conservative Greek government simply cooked their books to get in. In doing this they had the active help of Goldman Sachs which helped them by arranging a variety default swaps and other financial gimmicks to conceal the enormous debts that Greece was piling up. The European Central Bank authorities employ enough finance experts to see through these gimmicks or at least see that something fishy was going on. But for political reasons, there emerged a kind of norm of tolerance to failure to meet convergence criteria. Most of the current members of the Euro Zone failed to meet the strict standards for entry. But most of those failures were minor. Only Italy was really in flagrant violence of the criteria but allowed to join anyway. So, Greece hired some Wall Street city slickers to cook their books, the European Central Bank held their nose and let Greece join the Euro.

Step 3: In 2009, the Greek socialist party defeated the conservatives and reveals the true fiscal situation in Greece. With the 2008 recession in full swing, all Hell broke loose in Greece. By 2010, Greece was begging for the EU and the IMF to bail them out by restructuring their debt. A condition for that help was a substantial austerity package that included dramatically reducing the aforementioned generous welfare benefits.

Step 4: Greeks have been rioting periodically in reaction against the austerity measures – often violently.

5 comments:

Unknown said...

I have been searching on the internet for someone to tell me what is the difference between Greek's welfare system vs. other European countries. Sad to say, everyone making comments about Greek's welfare system is ridiculously generous without giving any specific examples ! Which means, most critics don't even know what exactly featured under Greek's system but keep giving "expert advises". This is stupid and lead me to believe, there is no much difference between Greece and other countries in EU in term of welfare system.

Anonymous said...

How about using "Greek welfare system comparison" to pull up a couple of hundred articles? It's like you don't know how to use a search engine....

Anonymous said...

Good day! I simply would like to offer you a big thumbs up
for the excellent information you have right here on this post.
I am returning to your web site for more soon.
Feel free to visit my web site :: diets that work fast

Anonymous said...

Wondeгful аrticle! Тhat is the type of іnfоrmatіon that are mеant
to be shared acrοѕѕ the net.
Ѕhame on Google for no lοnger positioning this ρost uρper!

Comе on oνeг and seek aԁviсe fгom my wеbsitе
. Thankѕ =)

my website credit counseling

Anonymous said...

I loνeԁ аs muсh as you will геceive cаrгied out гight
here. The sκetсh is attractive, youг authored mаterial ѕtylish.
nonethelesѕ, you command gеt gоt an neгvоusneѕs ovеr that уou wish be delivеring the following.
unωell unquestionably сomе fuгther foгmerly
аgain sіnce exaсtly the same neaгly а lot often
inside case you shield thіs increasе.

Also visit my ρаge - stop snoring